Check out ten common options trading strategies

Against the background of the continuous expansion of the crypto market, options trading is gradually moving from a professional niche tool to a wider range of application scenarios. Whether it\'s Bitcoin, Ethereum, or popular altcoins, investors can use a variety of strategies to manage risk, lock in earnings or hedge against volatility. This article will take stock of ten common option trading strategies, from simple buying bullish and bearish, to complex butterfly and cross-style combinations, helping investors understand operating logic, income and risk characteristics in a rapidly changing market, and make smarter investment decisions.

Ten common option trading strategies

1ˇ Long Call

● Strategy description: Buying a call option allows the underlying asset to be purchased at a specific strike price before expiration.

● Applicable market: Strong bullish market

● Income/risk: The maximum loss is royalties; the income theory is unlimited

● Notes: High leverage, low cost, but fast decay in time value

2 Long Put

● Strategy description: Buy a put option, allowing the underlying asset to be sold at a specific strike price before expiration.️

● Applicable market: Strongly bearish market

● Income/risk: The maximum loss is the premium; income can be close to the underlying price

● Remarks: Commonly used in bear markets or to hedge against asset declines

3ˇ Buy Covered Call

Strategy description: While holding the underlying asset, sell call options on the same asset

Applicable market: Prices move sideways or rise moderately

Income/risk: royalties are collected, income increases; part of the upside is abandoned

Notes: Suitable for long-term currency holders to enhance earnings

4️ Protective put options (Protective Put)

● Strategy Description: Buy put options while holding the underlying asset

● Applicable market: Bullish but worried about a correction

● Benefit/Risk: Limited downside risk; cost is premium

● Remarks: Similar insurance strategy

5️ Hedge put options (Married Put)

● Strategy description: simultaneously purchase the underlying asset and a put option on the same asset

● Applicable market: Want to gain appreciation of the underlying asset while hedging against downside risks

● Benefit/Risk: Profit from the underlying increase; loss from the underlying decline is limited

● Notes: Commonly used for portfolio protection

6️ Collar

● Strategy description: Hold the underlying asset, while buying put options and selling call options

● Applicable market: Robust bullish or volatile markets

● Returns/risks: upside gains are limited; downside risks are protected

● Notes: Low-cost insurance strategy

7️ Long Straddle

● Strategy description: Purchase call options and put options at the same strike price at the same time

● Applicable market: Large fluctuations are expected, but the direction is uncertain

● Benefit/Risk: Profits can be achieved by a sharp rise or a sharp fall in prices; if there is insufficient volatility, the premium will be lost

● Remarks: Event-driven strategies (such as halving, announcements)

8️ Long long-term breakthrough (Long Strangle)

● Strategy description: Purchase call options and put options at different strike prices at the same time

● Applicable market: Expect large fluctuations and uncertain directions, but want to reduce costs

● Benefit/Risk: Need a larger market to be profitable; costs are lower than cross-style

● Notes: Suitable for waiting for a breakthrough market

9️ Iron Butterfly (Iron Condor)

● Strategy description: Sell both call and put options with higher strike prices and buy call and put options with lower strike prices at the same time

● Applicable markets: price swings or small fluctuations

● Income/risk: income on royalties; Limited losses

● Remarks: Restricted risk + yield strategy